How a 1997 Power Grab is costing Arkansas taxpayers millions on pet projects
The 1997 session of the Arkansas legislature has been called “Grab Fest.” The media primarily remembers Grab Fest for legislation passed to financially benefit some legislators enrich themselves from a $3 million program to provide lawyers for children involved in custody disputes. A number of Arkansas legislators were indicted or investigated and some went to prison.
But Grab Fest was bigger than just that scheme. Grab Fest describes the whole 1997 session in which Democrat legislative leaders sought to gain budget control against a Republican Governor who had not been elected to that position by the people.
On July 15, 1996, Lieutenant Governor Mike Huckabee became Governor after Governor Jim Guy Tucker resigned due to a criminal conviction. Huckabee faced a state legislature that was overwhelmingly Democrat and many of his agency heads were still holdovers from the Tucker administration. Legislative leaders knew the budget better than Huckabee and knew many agency heads better than Huckabee. Legislators seized the opportunity to take control of the state budget.
Taxpayers are still paying dearly for Grab Fest because of the grab of power over the General Improvement Fund (GIF) which was primarily used for one time expenditures for state agencies.
General Improvement Fund changes for the worst
GIF is commonly referred to as “surplus funds.” Spending surplus funds on special projects sounds better to the folks back home but it is not really a surplus. It is merely state revenue skimmed from the top and distributed in a different way from the rest of the state budget. GIF was for one-time state expenditures that Governors and legislators did not want to add the into the agency’s regular general revenue budget, because the extra funds would inflate the agency’s budget for the future.
Another reason politicians like GIF funding is: it allows the general revenue budget to look smaller. Then and now public officials brag how they have worked to hold the line on the general revenue budget, while hundreds of millions more of taxpayer dollars are spent through GIF.
How did Grab Fest impact GIF spending?
Before 1997 all the projects in GIF, whether requested by the Governor or by a legislator were lumped together in one list and both the Governor and the legislature had to cooperate on GIF spending priorities.
In Act 1356 of 1997 the legislature took control of part of the GIF money by creating a “Legislative Division” of GIF and an “Executive Discretionary Division” of GIF. In 1997 the Legislative Division was primarily about which projects would get funding priority and giving legislators (and not the Governor) credit for many GIF projects.
The creation of a Legislative Division and Executive Division changed the dynamics of GIF. It quickly created an attitude of entitlement – this is my money. In future sessions, the funding for the Legislative Division was divided between the House of Representatives and Senate and each legislator was given a share. The “share” was unofficial but legislators kept track of how much was being obligated.
The attitude of “it’s my money” gave rise to many legislators directing their shares on purely local projects. Even non-governmental entities began to receive “grants.” (For example, Boys Clubs etc.). The local projects were popular back home and became a reelection tool. (“Look what he has done for us now. He fought them city slickers and brought home the bacon.”)
Arkansas politicians also created a third division – Shared Mandatory Obligations Division. Just creating a shared division further emphasized that the other two categories are discretionary funds available for legislators and for the Governor.
A setback and the creation of an even worse plan
The GIF scheme looked like it would have to end when several projects were challenged by attorney and former legislator Mike Wilson. Wilson challenged several 2005 GIF appropriation acts for projects given funding through the GIF distribution act. Wilson argued that, among other things, the acts constituted “local and special legislation” in violation of Amendment 14 to the Arkansas Constitution.[i]
In 2006 the Arkansas Supreme court declared unconstitutional an act providing $400,000 to the city of Bigelow for “infrastructure, sewer, and streets”.[ii] In June 2007, the court again sided with Wilson in ruling against other local projects.[iii] But the Arkansas legislature came up with a new scheme to get around the court decisions.
The new system for the Legislative Division of GIF avoided passing local acts and instead appropriated funds to various state agencies and Regional Planning and Development District for the purpose of making grants. These appropriations were made with the understanding that directions on who was to receive grants would be sent by the legislator. The new system opened a Pandora’s Box of discretionary spending. The money flows even more freely and there is even less oversight.
The new system keeps the process mostly out of the public eye and the wasteful spending is unchecked. I say “mostly out of the public eye” because quite a few legislators are still eager to get free local publicity through a photo opportunity awarding a GIF check to a local entity. Some projects also come to public attention when complaints are made, such as in the spending of grant money for a local fireworks show in Saline County and in the making of a large award to a small private religious college in Springdale.
The irony of Grab Fest
Grab Fest 1997 grabbed power from Governor Huckabee, but the irony is governors have embraced the system because it also gives them more discretion over their share. Although some expenditures by the Governor requires approval by the Arkansas Legislative Council, the Council has been essentially a rubber stamp for the Governor – after all committee members have their share so why would they interfere with the Governor’s share.
Arkansas’ Republican Revolution and GIF
If there ever was a time when reform of GIF could have had a chance, it should have been with 2015’s Republican revolution. 2015 ushered in an era of having a Republican Governor and Republican majorities in both houses of the legislature. Republicans have been thought of as at least being more fiscally responsible and more favorable to fiscal accountability than Democrats.
Although there was an influx of Republican legislators in 2013 and 2015, Republicans already serving were used to the political benefits of the Democrat imitated Grab Fest of GIF. The practice was seen as normal.
In 1997 while Grab Fest was going on, Asa Hutchinson had just been elected as a Congressman and was learning the ropes in Washington D.C. Congress has its own huge problem with spending. The Congressional attempt to ban earmarks was still years away and only occurred after the notorious “bridge to nowhere” gained national attention.[iv]
When Governor Asa Hutchinson came to office there was some hope that he would end Arkansas’ version of earmarks in the form of GIF. The hope was based on the Governor’s statement in early 2015 that his budget might not include GIF. The Arkansas Democrat Gazette wrote:
Hutchinson said he left no surplus funds in his proposed budget for any General Improvement Fund projects for lawmakers or the governor. “The priority should be on the overall budget needs of the state as well as the tax cut that is a priority,” he told reporters. “While there is some very good GIF spending, that is not the highest state priority for this year.”
Teague [Democrat Senator Larry Teague] said he’s told senators that he expects to have more discussions about not having General Improvement Fund monies for the Legislature. “I just don’t see that holding, but we’ll see,” he said.[v]
Senator Teague was correct. GIF went on undeterred. Further, the Governor has embraced other transfers of so called “surplus” for major projects. (Remember it is not real money if it is called “surplus.”)
The Republican Revolution did nothing to curb discretionary spending of taxpayer money. Instead the Democrat’s Grab Fest of GIF continues today and all the politicians (Republican and Democrat) still get “their share.”
Mike Wilson Part II
With elected officials showing no inclination of reining in GIF, we look again at the efforts of Mike Wilson. Mike Wilson has filed a new lawsuit against the current scheme but the pending suit hasn’t fazed legislators who still want their “share.” Will Wilson be successful in his court fight? Even if he is, will our elected officials just find another way to continue the practice?
Final Thoughts
Isn’t it swell when a power grab from almost twenty years ago works to the benefit of legislators and governors so they can spend more taxpayer money on pet projects. No? Then you must not be a politician.
[i] “The General Assembly shall not pass any local or special act. This amendment shall not prohibit the repeal of local or special acts. ” Ark. Const. amend. 14.
[ii] Wilson v. Weiss, 368 Ark. 300, 245 S.W.3d 144 (2006) (Wilson I )
[iii] Wilson v Weiss, 370 Ark. 205, 258 S.W3d 351 (2007)
[iv] The “Bridge to Nowhere” was funding for a bridge from Ketchikan, Alaska, to the little island of Gravina, Alaska. The funding for the bridge was slipped into a bill to provide financial relief for damage from Hurricane Katrina.
[v] Hutchinson pitches 3% budget lift, Arkansas Democrat Gazette, Jan 28, 2015